Japan’s finance ministry on Friday classified the parent company of retail giant 7-Eleven as an “essential” company for the manufacturing sector, which could make a takeover by Canadian rival Couche-Tard more difficult.
“Essential industries are those for which prior notification is required due to a significant risk of harm to national security,” the ministry explained on its website.
The “prior notification” system means that Japanese authorities have the power to issue a suspension and desist order, including to foreign investors in certain takeover cases.
On Sunday, Canadian retailer Alimentation Couche-Tard (ACT) announced its intention to continue its attempt to buy its Japanese competitor 7-Eleven, owner of 85,000 stores worldwide, despite the rejection of its initial offer two days earlier.
In its rejection letter to Canadians, Japanese retail giant Seven & i Holdings deemed this first offer to be “grossly undervalued” and “opportunistic.”
The group had specified that ACT’s offer was $14.86 per share (€13.37), which is roughly the same as the market value of Seven & i.
But, besides the price, the Japanese group had also pointed out regulatory concerns.
“Your proposal fails to adequately recognize the multiple and significant challenges that such a transaction would face from U.S. competition law enforcement agencies in the current regulatory environment,” the Japanese group said in the letter.
But ACT has announced its intention to insist and if this operation materializes, it would create a distribution behemoth, with the 85,000 stores owned by Seven & i — the operator of 7-Eleven — in 19 countries and the 16,700 stores in 31 countries owned by Couche-Tard, including the Circle K brand.
It would also be the largest foreign acquisition ever of a Japanese company, valued at around US$39 billion.
Other entities classified as “essential” in Japan include manufacturers in the nuclear, rare metals and microchip sectors, as well as companies in the cybersecurity and infrastructure sectors.